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The Federal Trade Commission on Wednesday sued Intel Corp., the world’s leading computer chip maker, charging that the company has illegally used its dominant market position for a decade to stifle competition and strengthen its monopoly. What is interesting is that FTC accuses Intel of anticompetitive behavior not only against arch-rival Advanced Micro Devices, but also against Nvidia Corp.

“Intel has engaged in a deliberate campaign to hamstring competitive threats to its monopoly. It’s been running roughshod over the principles of fair play and the laws protecting competition on the merits. The commission’s action today seeks to remedy the damage that Intel has done to competition, innovation, and, ultimately, the American consumer,” said Richard A. Feinstein, director of the FTC’s bureau of competition.

In its complaint, the FTC alleges that Intel has waged a systematic campaign to shut out rivals’ competing microchips by cutting off their access to the marketplace. In the process, Intel deprived consumers of choice and innovation in the microchips that comprise the computers’ central processing unit (CPU).

According to the FTC complaint, Intel’s anticompetitive tactics were designed to put the brakes on superior competitive products that threatened its monopoly in the CPU microchip market. Over the last decade, this strategy has succeeded in maintaining the Intel monopoly at the expense of consumers, who have been denied access to potentially superior, non-Intel CPU chips and lower prices, the complaint states.

The FTC’s administrative complaint charges that Intel carried out its anticompetitive campaign using threats and rewards aimed at the world’s largest computer manufacturers, including Dell, Hewlett-Packard (HP), and IBM, to coerce them not to buy rival computer CPU chips. Intel also used this practice, known as exclusive or restrictive dealing, to prevent computer makers from marketing any machines with non-Intel computer chips.

In addition, allegedly, Intel secretly redesigned key software, known as a compiler, in a way that deliberately stunted the performance of competitors’ CPU chips. Intel told its customers and the public that software performed better on Intel CPUs than on competitors’ CPUs, but the company deceived them by failing to disclose that these differences were due largely or entirely to Intel’s compiler design.

Having succeeded in slowing adoption of competing CPU chips over the past decade until it could catch up to competitors like Advanced Micro Devices, Intel allegedly once again finds itself falling behind the competition – this time in the critical market for graphics processing units, commonly known as GPUs, as well as some other related markets. These products have lessened the need for CPUs, and therefore pose a threat to Intel’s monopoly power.

Intel has responded to this competitive challenge by embarking on a similar anticompetitive strategy, which aims to preserve its CPU monopoly by smothering potential competition from GPU chips such as those made by Nvidia, the FTC complaint charges. As part of this latest campaign, Intel misled and deceived potential competitors in order to protect its monopoly. The complaint alleges that there also is a dangerous probability that Intel’s unfair methods of competition could allow it to extend its monopoly into the GPU chip markets.

According to the FTC’s complaint, Intel’s anticompetitive tactics violate Section 5 of the FTC Act, which is broader than the antitrust laws and prohibits unfair methods of competition, and deceptive acts and practices in commerce. Critically, unlike an antitrust violation, a violation of Section 5 cannot be used to establish liability for plaintiffs to seek triple damages in private litigation against the same defendant. The complaint also alleges that Intel engaged in illegal monopolization, attempted monopolization and monopoly maintenance, also in violation of Section 5 of the FTC Act.

To remedy the anticompetitive damage alleged in the complaint, the FTC is seeking an order which includes provisions that would prevent Intel from using threats, bundled prices, or other offers to encourage exclusive deals, hamper competition, or unfairly manipulate the prices of its CPU or GPU chips. The FTC also may seek an order prohibiting Intel from unreasonably excluding or inhibiting the sale of competitive CPUs or GPUs, and prohibiting Intel from making or distributing products that impair the performance–or apparent performance–of non-Intel CPUs and GPUs.

Tags: FTC, , Intel, AMD, Nvidia

Discussion

Comments currently: 5
Discussion started: 12/17/09 05:26:58 AM
Latest comment: 02/07/10 10:59:11 PM
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1. 
The Federal Trade Commission has finally woken up; using dirty business tactics, Intel has become too big for its shoes .

I think Intel's monopoly will get weaker day by day, as Global Foundries is investing more and more. In the year 2015, don’t be surprised if you see Global Foundries (AMD) over taking Intel.
0 0 [Posted by: Ibnsina  | Date: 12/17/09 05:26:58 AM]
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2. 
About time someone in the gov is seeing the dmg that intel is doing. It is a shame the article didnt say anything about Intel monopolizing its chipset business, forcing AMD to basically do the same to try and keep up. This leaves Nvidia out of the chipset business and hurts their gfx card market as you hardly see any new AMD chipsets that support SLI and Intel barely supports it now.
0 0 [Posted by: daseto  | Date: 12/17/09 09:40:09 AM]
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- collapse thread

 
all nvidia has to do to fix that is enable SLI on all PCI-E chipsets. because every chipset can do it, and the only thing stopping them from doing it is a white-list in the graphics drivers.

the real question is can nvidia swallow their pride and do it.
0 0 [Posted by: Countess  | Date: 12/19/09 03:03:51 AM]
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3. 
Finnaly the FTC woke Up. its about time ! sue them make them punish for their deeds.
0 0 [Posted by: 3Dkiller  | Date: 12/20/09 03:01:50 PM]
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4. 
INVENTORS - DO NOT TRUST INTEL
I invented a CPU cooler - 3 times better than best - better than water. Intel have major CPU cooling problems - "Intel's microprocessors were generating so much heat that they were melting" (iht.com) - try to talk to them - they send my communications to my competitor & will not talk to me.

Winners of major 'Corporate Social Responsibility' award.

Huh!!!!

When did RICO get repealed?"

INVENTORS - DO NOT TRUST INTEL!!!
0 0 [Posted by: Stuart  | Date: 02/07/10 10:59:11 PM]
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